Earn More, Pay More

• The progressive tax code means that marginal income taxes rise from 15% to 39.6% based on an increase of taxable income. For example, an individual earning $25,000 a year pays 15% in taxes. If the spouse earns an additional $25,000, those earnings are added onto household income and the couple moves into a higher tax bracket, paying 15% on roughly $18,000 of their income and 28% on the remainder that falls into the higher tax bracket. This could result in a marriage penalty of about $1,000.
  
  

Same Earnings, Different Result

• Oddly, another couple with different circumstances may pay less tax on the same amount of income. If one spouse earns substantially more or less than the other, filing a joint tax return could prove advantageous. For example, a couple with one spouse earning $40,000 and the other working part-time and earning $10,000 will earn the same $50,000 as the couple described in the first example but will pay about $900 less in tax when filing jointly.
  
  

Unusual Transactions

• Sometimes, an unusual transaction, such as the sale of a business or real estate, stock options or game winnings, will generate an increase in income to one spouse. When the couple's income exceeds a certain amount, which varies from year to year, an "alternative minimum tax" (AMT) kicks in and may raise the couple's tax liability. Filing separate returns could avoid this alternative tax.
  
  

Recap

• Filing a joint tax return most often works to the advantage of married couples where one spouse earns substantially more than the other does. Couples who earn approximately the same amount of money could pay more taxes filing jointly. The IRS allows taxpayers to choose the option of filing jointly separately in order to lower the couple's overall tax liability.